Most people spend more time researching their next car purchase than they spend on their Social Security claiming decision. That’s a problem, because for many retirees, Social Security is the single most valuable asset they own.
We’re not overstating that. A couple who both worked full careers and coordinates their claiming strategy wisely could collect $1.5 million or more in lifetime benefits. Get it wrong, and they might leave hundreds of thousands of dollars on the table permanently. There’s no do over.
If you’re approaching retirement in Colorado and you haven’t worked through a Social Security strategy with a fee-only retirement advisor, this article will show you exactly why that matters.
Social Security Is the Best Annuity You Can’t Buy
Here’s a framing shift that changes how most people think about this decision: Social Security isn’t just a government benefit. It’s an annuity, and it’s arguably the best one available anywhere.
Think about what you’d have to pay an insurance company to get what Social Security delivers: guaranteed income for life, inflation-adjusted every single year through Cost of Living Adjustments (COLAs), backed by the full faith and credit of the U.S. government, and potentially continuing to a surviving spouse after you’re gone.
If you tried to replicate those features with a commercial annuity, the premium would be enormous, and you’d still carry insurance company risk. Social Security carries none of that.
That framing matters when you’re deciding when to claim, because delaying Social Security is essentially the same as buying more of the best annuity available at a very steep discount. Every year you delay past your Full Retirement Age (FRA), your benefit increases by 8%. That’s guaranteed, risk-free, and inflation-adjusted.
No bond, no CD, no fixed annuity consistently offers that. It’s one of the best deals in personal finance.
What Waiting Until 70 Actually Gets You
Your Social Security benefit grows by roughly 8% for every year you delay claiming past your Full Retirement Age, up through age 70.
Let’s say your FRA is 67 and your benefit at that age would be $3,000 per month. If you delay to 70, your benefit jumps to approximately $3,720 per month, a 24% permanent increase. That increase applies to every payment you receive for the rest of your life, and to any COLA adjustments on top of it.
No investment with that kind of guaranteed, inflation-linked return exists on the open market. Not even close.
For someone in good health with average or above-average longevity expectations, delaying to 70 is almost always mathematically superior. The break-even point, meaning the age at which the cumulative total of the larger checks surpasses what you’d have collected by starting earlier, typically falls somewhere in the late 70s. Most Americans live well past that.
But here’s where it gets complicated. Whether this strategy makes sense for you depends on a set of personal variables that vary significantly from one household to the next.
Why There’s No Universal Answer
The internet is full of articles telling you to “always wait until 70” or, on the other side, “take it as soon as you’re eligible at 62.” Both positions are oversimplifications, and both could cost you significantly depending on your situation.
Here are some of the key variables a retirement financial advisor works through with you before arriving at a strategy:
Your health and family longevity history. Delaying benefits pays off if you live long enough to break even and then some. If you’re in poor health or have a family history of shorter lifespans, the math may shift toward claiming earlier. This isn’t morbid, it’s honest financial planning.
Your spouse’s earnings history and age difference. Spousal and survivor benefits add enormous complexity to this decision. The higher earner in a couple has an outsized responsibility here, because their benefit effectively becomes the survivor benefit when one spouse dies. That’s a permanent number. Optimizing it at the household level often looks very different from optimizing it on an individual basis.
Your other income sources in early retirement. If you have a pension, rental income, or a large portfolio generating distributions, you may have the cash flow to bridge a delay without significant lifestyle sacrifice. If you’d be drawing heavily from savings to fund a gap between retirement and age 70, the math shifts.
Your tax situation. This one surprises most people. Up to 85% of your Social Security benefit can be taxable depending on your combined income. If you’re doing Roth conversions in early retirement to reduce future RMDs, claiming Social Security simultaneously could push your income into a higher bracket and undercut both strategies. Sequencing matters.
Medicare and IRMAA. Your Medicare Part B and Part D premiums are based on your income from two years prior through what’s called the Income-Related Monthly Adjustment Amount, or IRMAA. Taking Social Security during a year when you’re also doing Roth conversions or taking large portfolio distributions could trigger IRMAA surcharges you didn’t anticipate. These add up.
Required Minimum Distributions. Starting at age 73, the IRS requires you to take distributions from pre-tax accounts like Traditional IRAs and 401(k)s. If your pre-tax balances are large, those forced distributions can stack on top of Social Security and create a significant tax burden later in retirement. Planning for this interaction well in advance is part of what good retirement income planning looks like.
Whether you’re still working. If you claim Social Security before Full Retirement Age while still earning wages, the SSA reduces your benefit by $1 for every $2 you earn above a threshold. The benefit is eventually restored, but it complicates short-term cash flow planning.
These aren’t edge cases. Every one of these variables applies to a meaningful portion of retirees, and they interact with each other in ways that can’t be captured by a simple online calculator.
Don’t Overlook Spousal and Survivor Benefits
Married couples have access to claiming strategies that single individuals don’t. Understanding them could add significantly to your household’s lifetime income.
A spouse who earned less during their career (or didn’t work outside the home) may be entitled to up to 50% of their higher-earning spouse’s benefit at Full Retirement Age. That spousal benefit doesn’t grow past FRA, which creates one consideration in the overall coordination.
The survivor benefit is where the stakes get highest. When one spouse dies, the surviving spouse keeps the larger of the two benefits and loses the smaller. If the higher earner claimed early and locked in a reduced benefit, the surviving spouse lives with that reduced number for the rest of their life. This is one of the most significant financial consequences of claiming early, and it disproportionately affects women, who on average outlive their husbands.
Getting spousal and survivor coordination right requires looking at the claiming strategy as a household decision, not two individual decisions happening side by side.
Divorced? Widowed? The Rules Are Different for You
Social Security has provisions that many people aren’t aware of, and they apply specifically to divorced and widowed individuals.
If you were married for at least 10 years before divorcing and you haven’t remarried, you may be eligible for benefits based on your ex-spouse’s earnings record. Your claim doesn’t affect what your ex-spouse receives. This is a benefit many eligible people never claim simply because they don’t know it exists.
Widow and widower benefits carry their own rules around eligibility ages, interaction with your own record, and the option to switch between benefits at different points. These decisions deserve careful analysis, not guesswork.
“Will Social Security Even Be There When I Retire?”
This is one of the most common questions we hear from people who are 10 to 15 years out from retirement, and it’s a reasonable one. You’ve seen the headlines. The Social Security trust funds are projected to be depleted around 2033 or 2034 based on the latest Trustees Report, after which incoming payroll tax revenue alone would cover roughly 79 to 83 cents of every dollar in promised benefits.
Social Security almost certainly won’t disappear entirely. It’s one of the most politically protected programs in American history, and the fixes available to Congress, ranging from payroll tax adjustments to benefit formula changes to means testing for higher earners, are well understood. The political will to implement them is what’s uncertain, not the mathematical solution.
What’s realistic is some combination of benefit adjustments and tax changes over the coming years, likely phased in for younger workers while protecting people already near or in retirement. Whether that means slightly lower benefits, a higher Full Retirement Age for younger cohorts, or some other mechanism, nobody can say with certainty.
For someone in their 50s or early 60s today, the prudent approach isn’t to ignore Social Security in your planning or to panic about it. It’s to build a retirement income plan that’s resilient whether benefits come in at 100% of what’s projected or somewhat less. That’s what comprehensive retirement planning looks like in practice.
Interestingly, this uncertainty makes the case for delaying even stronger in some scenarios. If benefits are ever reduced, a reduced percentage of a larger benefit is still better than a reduced percentage of a smaller one.
The Break-Even Analysis Is a Starting Point, Not a Decision
A break-even analysis calculates the age at which the cumulative value of delaying Social Security surpasses the cumulative value of claiming early. It’s a useful data point, but it’s not the whole picture.
The analysis changes depending on what discount rate you apply, whether you account for investment returns on early benefits you could have invested, your marginal tax rate on those benefits, and of course your longevity assumptions. Two advisors using different assumptions can arrive at meaningfully different break-even ages for the same client.
What this means practically is that a break-even analysis is a starting point, not a conclusion. It has to be situated inside your broader financial plan alongside tax projections, portfolio withdrawal sequencing, healthcare cost planning, and estate goals.
How We Handle This at Inclinevest
At Inclinevest, we work with pre-retirees and retirees in the Denver metro area and across Colorado who have accumulated significant assets and want to make sure they’re optimizing every piece of their retirement income puzzle.
Social Security optimization doesn’t happen in isolation. We look at it in the context of your full financial picture, including Roth conversion opportunities during the gap years before you claim, how Social Security income interacts with your portfolio withdrawal strategy, IRMAA planning, RMD projections, estate planning goals, and your specific household dynamic.
If you and your spouse have meaningfully different earning histories, different ages, or different health profiles, the right strategy for your household probably doesn’t match the generic advice you’ll find online. And if you have equity compensation, a pension, or rental income layered on top, the coordination becomes more complex still.
This is the kind of personalized, tax-aware retirement income planning we do as a fee-only fiduciary advisory firm. We don’t earn commissions. We don’t have products to sell. Our only job is to build a strategy that works for you.
If you’re within five to ten years of retirement and you haven’t had a thorough Social Security analysis done, we’d encourage you to schedule a conversation. The claiming decision is permanent. It deserves serious attention before you make it.
Key Takeaways
- Social Security is the most valuable inflation-adjusted, lifetime-guaranteed income source most retirees have. Treat it accordingly.
- Delaying to age 70 locks in an 8% per year increase past Full Retirement Age, one of the best guaranteed returns available anywhere.
- The right claiming age depends on your health, your spouse’s earnings history, your other income sources, your tax situation, and your broader retirement income plan.
- Spousal and survivor benefit coordination is often more valuable than individual optimization. Married couples need a household strategy.
- The Social Security funding concern is real but not catastrophic. Plan for some uncertainty without ignoring the benefit entirely.
- A break-even analysis is useful but incomplete. Social Security strategy belongs inside a comprehensive retirement income plan, not as a standalone calculation.
Sources
- Social Security Administration, “Retirement Benefits” — ssa.gov/benefits/retirement/
- Social Security Administration, “When to Start Receiving Retirement Benefits” — ssa.gov/pubs/EN-05-10147.pdf
- Social Security Trustees Report 2024, Summary of Findings — ssa.gov/oact/trsum/
- Center on Budget and Policy Priorities, “Policy Basics: Top Ten Facts about Social Security” — cbpp.org
- IRS Publication 915, “Social Security and Equivalent Railroad Retirement Benefits” — irs.gov/pub/irs-pdf/p915.pdf
- Medicare.gov, “IRMAA: Income-Related Monthly Adjustment Amounts” — medicare.gov
This article is for general informational and educational purposes only. It isn’t personalized investment, tax, or legal advice, and it shouldn’t be relied on as a substitute for guidance specific to your situation. Inclinevest LLC is a registered investment adviser. Please consult a qualified professional before making decisions about your own financial circumstances.
